The present invention relates to recurring payment cancellation services and, more particularly, to a system and method for upgrading cancellation services relating to the identifying of cancelled recurring payments.
Recurring payments are common in the marketplace. A cardholder preauthorizes a merchant to automatically bill a credit or debit card at a preset interval (e.g., monthly, quarterly or annually). This is typically done for a matter of convenience for both the cardholder and the merchant. These payment transactions typically occur without incident.
However, changes in the merchant/cardholder relationship can introduce challenges into the process. For example, the cardholder may revoke preauthorization to bill his account due to either a change in payment type or discontinuation of a merchant relationship. Although most merchants quickly honor the change in the recurring payment billing arrangement, there are times when the merchant does not make the requested change in a timely fashion. In this case, the cardholder continues to incur the periodic charge. He then contacts the card issuer, and requests a refund. This request for a refund results in the issuing bank seeking a chargeback from the merchant bank.
Although a payment network such as the MasterCard Worldwide Network includes a procedure for chargebacks, this process nevertheless results in cost to the participants, as well as a potential loss of goodwill between the issuing back and the cardholder. Continued billing to a cardholder's account results in complaints to the issuer's customer service department, and may even result in the cardholder asking to have his or her account closed.
To reduce the frequency of chargebacks resulting from cancelled recurring payments, as well as to maintain the relationship between the issuing bank and its cardholder, a cancellation service can be provided whereby a database is maintained of unauthorized recurring payments associated with particular cards. An issuing bank can participate in such a cancellation service by inputting information associated with a particular card into the database to prevent future unauthorized billing from a selected merchant. In this way, the recurring charge is blocked before it can appear on the cardholder's bill, thus eliminating complaints from the cardholder, as well as the need for a chargeback by the issuing bank.
Although databases of cancelled recurring payments are effective in blocking unauthorized recurring payments, the existing systems require the issuing bank (or some other authorized entity) to provide the database with the necessary financial data, e.g., account number, merchant identity, merchant bank identity and transaction amount. Typically, this data is manually entered into the database by an employee of the issuing bank. As a result, the entry of data into the cancellation database can be delayed and/or never completed due to the time and effort involved with inputting such data.
In addition, some charges are not properly identified as recurring payments by the submitting merchant. This failure to identify the payment as a recurring payment can result in the bypassing of the cancellation database during the authorization/clearance process.
There is therefore a need in the art for a system and method for providing an updated database of cancelled recurring payments for comparison during the authorization and/or clearance process. There is a further need in the art for a system and method of identifying cancelled recurring payments even when the submitted charge is not properly identified as a recurring payment.